Deregulate Wall Street to solve all the problems

Discussion in 'Economy' started by EdwardBaiamonte, Jul 25, 2012.

  1. EdwardBaiamonte
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    EdwardBaiamonte Gold Member

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    Its really very simple. The liberals have taught everyone that they've got it under regulatory control so everyone hands over their money and it gets stolen.

    In a free Republican/libertarian/capitalist economy everyone would in effect be a regulator. They would demand assurances; if Wall Street did not provide them Wall Street would disappear.
     
  2. Widdekind
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    Widdekind Member

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    Former Citigroup Chairman Calls For Breaking Up Big Banks | ThinkProgress

    Former Citigroup Chairman & CEO Sanford Weill suggested:
    Inexpertly, perhaps tax-payers could incentivize Weill's proposal, by FDIC insuring only those banks conforming to his specifications? Or, insuring only those deposits, backed by safe commercial & real-estate loans?
     
  3. expat_panama
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    expat_panama Silver Member

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    Been done. From here:
    FDIC insurance covers all deposit accounts, including checking and savings accounts, money market deposit accounts and certificates of deposit. FDIC insurance does not cover other financial products and services that banks may offer, such as stocks, bonds, mutual fund shares, life insurance policies, annuities or securities.
     
  4. Norman
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    Norman Gold Member

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    Uhm. Where in the text does it say that only deposits backed by real estate loans etc. are covered by FDIC?

    To my knowledge all deposits are covered and the banks can back that up with risky assets - which they have to do because only return matters when your deposit is covered. And high risk = high return.
     
    Last edited: Jul 26, 2012
  5. expat_panama
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    expat_panama Silver Member

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    Huh, that's not what you wanted after all. Of course there's no way of knowing, but you might be thinking that banks can make ridiculously risky loans on any kind of real-estate without any limits by FDIC audits. OK, maybe it sounds stupid but there are people on these threads that actually think that way.

    Problem here is you're not saying what you wanted. Imagine if I'd replied with "Uhm, where in my post does is say the FDIC quote said only deposits backed by real estate loans etc. are covered by FDIC?" That would be slimy, antagonistic, whiny and snarky but it wouldn't get anywhere in figuring out how banks work.

    Question: is there anything specific you'd like the FDIC to require in bank loans? For example, demanding that bank loans be "good" is not specific, while requiring that loans be for say, < half ATA appraised value, that is specific.
     
  6. EdwardBaiamonte
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    EdwardBaiamonte Gold Member

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    not really, it sounds very very stifiling and socialist. I'd let the banks be as creative and risky as they want to be, but maybe the Feds could require a good accounting system so it would all be very transparent.

    Everyone said the mortgage back securities and derivitives, for example, were so complicated they could not be evaluated? Sounds like BS. All you needed was the average credit rating for the mortgage holders of the security or the tranches within the security and their relative value would have been clear enough for all to see. An A,B, or C rating from a bought off rating agency was absurd.
     
  7. PLYMCO_PILGRIM
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    PLYMCO_PILGRIM Gold Member

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    That actually makes sense.
     
  8. EdwardBaiamonte
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    EdwardBaiamonte Gold Member

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    yep!! When Warren Buffet invests or buys something he doesn't look
    to a regulator to tell him its a good and safe investment. His motto is, "if i don't understand it, I don't buy it."

    When people buy huge complex instruments that no one understands it can only be because liberals assured them they had made the world a safe place for them. Liberals like Hitler Stalin and Mao had that in common: if you followed them they would lead you to the promised land they had created.
     
  9. Norman
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    Norman Gold Member

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    Actually my point in that post was just that FDIC covers all deposit accounts including the ones backed by stocks. I accidentally typed something different than I should have.

    My opinion on FDIC:


    I think the FDIC is fundamentally problematic and encourages risk taking no matter the limitations. The amount covered should be lowered or it should be done away with completely. One option would be that the banks or customers would get the insurance from private parties. Thus at least breaking the monopolistic and inflexible nature of FDIC.
     
  10. EdwardBaiamonte
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    EdwardBaiamonte Gold Member

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    Yes good idea. It would also be very helpful if there was a good accounting system so customers had an idea of what relative risks the banks were taking with their money. Someone who wanted higher interest would be free to invest at a bank that took higher risks thus making the entire system far more efficient than the current ones where the information is hidden from depositors.
     

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